Maxis Shows Healthy Growth In Consumer And Enterprise Business

Maxis reported a dip in its third quarter normalised earnings which slipped 4.3% and 3.1% year on year to RM315 million mainly due to a one-off increase in the corporate tax rate to 33% as a result of ‘Cukai Makmur’.

Meanwhile, the topline was recorded at RM2.4 billion, representing a marginal drop of 0.8% and a yearly improvement of +6.3%. Overall, the telcos normalised earnings came in line with both the research house and consensus expectations, accounting for 73.3% and 73% of full-year FY22 earnings estimates.

The marginal drop in revenue was ascribed to growth in service revenue, which was offset by a decline in device revenue. Improvement in service revenue to RM2.1b was on the back of healthy contributions from consumer and enterprise businesses. Consumer business growth was mostly influenced by more subscribers across postpaid, prepaid, and home connectivity fibre alongside higher ARPU in postpaid segments. Meanwhile, enterprise business sales increased marginally supported by growing Fixed & Solutions stack as part of the Enterprise convergence strategy. Y

On a year-on-year basis, Maxis recorded RM7.2b revenue in 9MFY22 owing to higher consumer sales and enterprise revenue. Consumer sales increased by 3.7% to RM5.1b due to steady growth in postpaid and home Connectivity. Meanwhile, enterprise revenue climbed RM1.2b. However, the bottom line fell by -7.6% because of the one-off prosperity tax i.e. ‘Cukai Makmur’ for the year (33% on chargeable income exceeding RM100m).

On CAPEX the group spent an increase of 12.9% focused on fibre build strategy as well as the core network capacity to better network performance and customer experience. Maxis also announced a third interim dividend of 5sen per ordinary share, bringing the total YTD dividends to 15sen per share.

MIDF has also forecast another 5sen dividend in 4QFY22 and has adjusted its dividend forecast to 20sen per share for FY22 and FY23.

In view of the performance, analysts at MIDF maintain a NEUTRAL stance on the operator. The management maintains its guidance for FY22 with service revenue of a low to mid-single-digit increase and EBITDA to be flat to a low single-digit increase.

Even though Maxis is still underway to evaluate the 5G Access Agreements requirement, MIDF said it believes that Maxis will eventually join the other five MNOs to execute the AA as Maxis will stay committed to providing 5G services. As the results were in line with expectations, no adjustments were made to the earnings estimate, and maintained the target price of RM3.78.

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